Donaldson Company, Inc. · NYSE:DCI
Donaldson — Investor Day (April 2023)
110 slides from Donaldson's investor day presentation, Apr 4, 2023
Slide 1: 2023 Investor Day
DONALDSON COMPANY 2023 INVESTOR DAY APRIL 2023 BLOOMINGTON, MINNESOTA
Slide 2: Agenda
Agenda 8:00 AM – 9:10 AM Formal Presentations Sarika Dhadwal Welcome and Opening Remarks Senior Director, Investor Relations 2023 Tod Carpenter INVESTOR Donaldson Redesigned for Long-Term Profitable Growth Chairman, President, and Chief Executive Officer DAY Ashley Merrill Enabling a Cleaner World T
Slide 3: Forward Looking Statement - Safe Harbor
Forward Looking Statement - Safe Harbor Statements in this presentation regarding future events and expectations, such as forecasts, plans, trends, and projections relating to the Company’s business and financial performance, are forward-looking statements within the meaning of the Private Securitie
Slide 4: Donaldson Redesigned for Long-Term Profitable Growth
2023 INVESTOR DAY Donaldson Redesigned for Long-Term Profitable Growth Tod Carpenter - Chairman, President, and Chief Executive Officer 4
Slide 5: What You Will Hear Today
What You Will Hear Today 2023 INVESTOR We are the leader in filtration solving increasingly complex problems DAY across a global customer base, harnessing a rapidly expanding portfolio of best-in-class technology We are partnering with our customers to solve the world’s most pressing filtration chal
Slide 6: Overview of a Redesigned Donaldson Company (NYSE: DCI)
Overview of a Redesigned Donaldson Company (NYSE: DCI) Key Statistics 2023 1915 ~14,000 140+ 2,700+ ~$7.8B ~13% INVESTOR Long-term Year Founded Employees Locations Active Patents Market Cap1 DAY Dividend CAGR Diversified Revenue Base (FY22 Sales) Generating Meaningful Results Revenue Adjusted EPS $3
Slide 7: Diverse Product Offering Across Industries on a Global Scale
Diverse Product Offering Across Industries on a Global Scale Global Sales Reach with Local Touch 2023 Physical sales presence in INVESTOR +80% of countries in which DAY 29% business is conducted EMEA 75% of volume produced within region 41% Ability to leverage “best-cost- country” manufacturin
Slide 8: Experienced, Invested, and Diverse Leadership Team
Experienced, Invested, and Diverse Leadership Team 2023 INVESTOR DAY Tod Carpenter Amy Becker Guillermo Briseño Andrew Dahlgren Richard Lewis Scott Robinson Chairman, President and Chief Legal Officer President, President, President, Chief Financial Chief Executive Officer and Corporate Secretary In
Slide 9: Donaldson Operating Model Committed to Global Success
Donaldson Operating Model Committed to Global Success Proof Points of Success 2023 Advancing Filtration INVESTOR 13% ~90% for a Cleaner World DAY Anticipate Revenue 3-year average Develop and growth CAGR adjusted FCF market needs Invest in Talent and quickly react to achieve post-COVID1 conversion t
Slide 10: Strengthening Position Through Strategic Evolution
Strengthening Position Through Strategic Evolution 2015 – 2016 2017 – 2018 2019 – 2020 2021 – NOW 2023 INVESTOR • Restructured business to • Increased R&D to further • Invested $15M for a new • Strengthened position for future DAY gain efficiencies strengthen material material research center growth
Slide 11: Increasing Opportunities Through Innovation and M&A
Increasing Opportunities Through Innovation and M&A +1,200 Patents Granted and 4 Acquisitions Since Last Investor Day 2023 INVESTOR DAY Sustainability Trend Penetrators Expand Service Offering Access New Markets • Dual stage battery vent • Filterminder connected air • Bioreactors for cultivated • Fi
Slide 12: Filtration Leader with Durable Competitive Advantages
Filtration Leader with Durable Competitive Advantages Long History of Filtration Technology Leadership Deep Customer Relationships • Over 100 years of filtration innovation • Solve mission critical needs with differentiated solutions 2023 • Invented the first engine air filter • Protect and build br
Slide 13: Redesigned to Further Leverage Competitive Strengths
Redesigned to Further Leverage Competitive Strengths Prior Donaldson Current Donaldson Inherited Benefits Sales by Segment Sales by Segment 2023 INVESTOR 8% DAY 30% Increased ownership 27% Mobile Solutions and accountability Engine Industrial Solutions Industrial 65% 70% Life Sciences Improved e
Slide 14: Significant Market Expansion Through Life Sciences
Significant Market Expansion Through Life Sciences Leveraging Current SAM: Leadership Positions 2023 INVESTOR ~$50B DAY Media and filter performance in air, hydraulic, and fuel Global mining air filtration and aftermarket products Previous SAM ~$38B1 Dust, fume, and mist collection for industrial ma
Slide 15: Better Positioned to Address a Portfolio of Opportunities Across All Segments
Better Positioned to Address a Portfolio of Opportunities Across All Segments • Growing customer need for higher performance solutions MOBILE SOLUTIONS to offset labor challenges 2023 • Utilizing technology to improve efficiencies and INVESTOR fuel economies in all end markets DAY • Increased activi
Slide 16: Path to Zero Emissions Plays Well to Donaldson's Offering
Path to Zero Emissions Plays Well to Donaldson’s Offering 2023 INVESTOR Next Generation Hydrogen Fuel Cell Battery Electric DAY Diesel Engines (FCEV) (BEV) Advanced technology and increased Different and higher technology Complex filtration systems will be required efficiency engines will continue t
Slide 17: Case Study: Enabling Sustainable Customer Outcomes
Case Study: Enabling Sustainable Customer Outcomes SOLUTIONS S U S TA I N A B I L I T Y STRENGTHS & EXAMPLES ENABLERS AT T R I B U T E S 2023 INVESTOR Fuel Cell Air Intake Filter Alternative DAY • Ensures fuel cell durability Power • Supporting customers with and performance their transition to low/
Slide 18: Strategic Priorities to Drive Profitable Growth
Strategic Priorities to Drive Profitable Growth 2023 INVESTOR DAY Expand Technologies Pursue Strategic Extend Market Access and Solutions Acquisitions Grow Addressable Market Leverage Foundational Filtration Accelerate Long-Term Growth by Extending Presence Capabilities to Expand Best-in-class Throu
Slide 19: Strategic and Disciplined Approach to M&A
Strategic and Disciplined Approach to M&A Investment Strategic Expand Life Sciences; Generate High Returns to Return 2023 Filters Maintain Core of Filtration Support Growth Strategy INVESTOR Criteria DAY Established Life Sciences Emerging Life Sciences • Gross margin accretive • Gross margin accreti
Slide 20: Unveiling 2026 Financial Targets
Unveiling 2026 Financial Targets Sales Operating Margin Incremental Margin 2023 INVESTOR DAY $3.8B – $4.3B 15.6% – 16.4% 20% – 24% +4% - 8% +80 - 160 bps Over the Cycle1 3-year CAGR1 vs fiscal year 2023 Strengthening Position for Profitable Growth Through Strategic Initiatives • Mid-single digit gro
Slide 21: Key Takeaways
Key Takeaways Leader in filtration with long history of solving the most difficult filtration problems 2023 1 and forming mission critical partnerships across global customer base INVESTOR DAY Best-in-class technology and strategic organizational redesign strengthens ability 2 to drive long-term pro
Slide 22: Enabling a Cleaner World Through Advanced Filtration
2023 INVESTOR DAY Enabling a Cleaner World Through Advanced Filtration Ashley Merrill - Director, ESG and Sustainability 22
Slide 23: Key Messages
Key Messages 2023 INVESTOR Executing sustainability strategy by enabling and advancing filtration 1 DAY for a thriving future Building on a strong foundation by establishing measurable 2030 2 ambitions aligned with our vision and aspirations Creating long-term value for stakeholders through products
Slide 24: Company Purpose is Foundation of Sustainability Strategy
Company Purpose is Foundation of Sustainability Strategy PURPOSE A D VA N C I N G F I LT R AT I O N F O R A C L E A N E R W O R L D 2023 INVESTOR DAY Sustainability strategy, Filtration for a Thriving Future, is grounded by company purpose – Advancing Filtration for a Cleaner World. This strategy re
Slide 25: Aspirations and 2030 Ambitions
Aspirations and 2030 Ambitions PRINCIPLE A S P I R AT I O N 20 3 0 AM B ITIO N 2023 Operate Help mitigate Targeting an absolute reduction of INVESTOR climate change Scope 1 and 2 GHG by 42%1,2 DAY Sustainably Operate Aim to have year-over-year reductions in Provide safe and life-changing events and
Slide 26: Road to GHG Emissions Reduction
Road to GHG Emissions Reduction APPROACH AMBITIONS ACHIEVEMENTS Identify our priorities Commit to targets Achieve and report out progress on ambitions 2023 INVESTOR DAY A S P I R AT I O N S ACTIONS What we strive to do Execute detailed action plan PAST PERFORMANCE MEDIUM-TERM LONG-TERM 2019-2022 202
Slide 27: Continually Integrating Sustainability into Solutions
Continually Integrating Sustainability into Solutions Case Study: Designing Sustainability Product Sustainability Impact Process Into Next-Gen Product 2023 INVESTOR Re-designed an engine air filter for a large customer, significantly reducing the resource inputs, while improving functionality and co
Slide 28: Integrating Sustainability into Operational Excellence
Integrating Sustainability into Operational Excellence Case Study: Sustainability in León, Mexico • Donaldson announced the expansion of a new plant in León, Mexico in 2021 2023 INVESTOR • The 265,000 square foot facility will help meet increased demand DAY • Expected to be completed in FY23 and wil
Slide 29: Enabling Customer Sustainability Through Filtration
Enabling Customer Sustainability Through Filtration Donaldson Product / Solution Battery 2023 pack vent INVESTOR DAY Proton Solaris bioreactor exchange Fuel cell air membranes intake filter Customer Product / Solution Zero emissions Alternative vehicles proteins Sustainable Outcome Supporting custom
Slide 30: Key Takeaways
Key Takeaways 2023 INVESTOR Executing sustainability strategy by enabling and advancing filtration 1 DAY for a thriving future Building on a strong foundation by establishing measurable 2030 2 ambitions aligned with our vision and aspirations Creating long-term value for stakeholders through product
Slide 31: Technology Enabling Future Growth
2023 INVESTOR DAY Technology Enabling Future Growth Michael Wynblatt, Chief Technology Officer 31
Slide 32: Key Messages
Key Messages 2023 INVESTOR 1 DAY Purification of fluids is challenging and critical to customer success Donaldson’s core technical capabilities, custom micro-materials and 2 custom chemistry, create solutions and opportunities across many markets Filters in key working fluids gather and leverage int
Slide 33: Filtration is Challenging but Crucial
Filtration is Challenging but Crucial The Cost of Not Having Particulates Proper Fuel Filtration 2023 INVESTOR • Fuel injectors easily damaged • Vary in size DAY • $1200 typical repair • Narrow sieve = catch smaller particulates • $4 billion in annual repairs • Wide sieve = greater flow for fluids D
Slide 34: Donaldson's Core Capabilities Form a Solution Toolbox
Donaldson’s Core Capabilities Form a Solution Toolbox 1 . P H Y S I C A L S E PA R AT I O N B Y C U S T O M M I C R O - M AT E R I A L S 2023 INVESTOR DAY Wet-Laid Media Nano Fibers Expanded Membranes Cast Membranes 2 . C H E M I C A L S E PA R AT I O N B Y C U S T O M C H E M I S T R I E S Carbon W
Slide 35: Immersed in Critical Working Fluids, Filters can Monitor Whole System Performance
Immersed in Critical Working Fluids, Filters can Monitor Whole System Performance Donaldson Capabilities Value Proposition 2023 • Pressure sensing • Remaining useful life of the filter INVESTOR DAY • Acidification measurement • Remaining useful life of the oil • Contaminant recognition • Identify sp
Slide 36: Donaldson Has Built an Innovation Engine
Donaldson Has Built an Innovation Engine >1,300 >160,000 R&D-Dedicated 2,715 >6% CAGR Scientists and Engineers Laboratory Sq. Ft Pilot Production Facilities Active Patents 6 yr. R&D Investment 2023 INVESTOR DAY Historical Revenue ($M) and Adjusted Return on Invested Capital (%) Entering New Markets
Slide 37: Donaldson Core Capabilities Address Key Electric Vehicle Challenges
Donaldson Core Capabilities Address Key Electric Vehicle Challenges FUEL CELL B AT T E R Y 2023 Air Hydrogen Air INVESTOR Intake Intake Intake (Li-Air) DAY Membrane Substrate Burst FUEL CELL AND Cathode Burst Vent Vent SOME BATTERIES Membrane Substrate Hydrogen Intake Air Intake Burst Vent Nanofiber
Slide 38: Donaldson Core Capabilities Apply Directly to Bioproduction
Donaldson Core Capabilities Apply Directly to Bioproduction Cell culture Production Harvest Process Purification Bulk drug Fill and Final expansion bioreactor chromatography substance finish biopharmaceutical 2023 INVESTOR DAY Alternative Solvent Cultured Food Cell Separation for Chromatography Recl
Slide 39: Intelligent Filtration Drives Services Capabilities
Intelligent Filtration Drives Services Capabilities 2023 INVESTOR DAY Contaminant Dust Collector Wall iCue Connected Dust Collector Facility Air Modeling Tool LAUNCHED IN DEVELOPMENT LAUNCHED IN DEVELOPMENT • Pulse Valve • Remaining Filter Life • Plant Contaminant • Plant Air Service Health Monitori
Slide 40: Key Takeaways
Key Takeaways 2023 INVESTOR 1 DAY Purification of fluids is challenging and critical to customer success Donaldson’s core technical capabilities, custom micro-materials and custom 2 chemistry, create solutions and opportunities across many markets Filters in key working fluids gather and leverage in
Slide 41: Q&A
DONALDSON COMPANY Q&A APRIL 2023 BLOOMINGTON, MINNESOTA
Slide 42: Driving the Next Phase of Growth Across Mobile Solutions
2023 INVESTOR DAY Driving the Next Phase of Growth Across Mobile Solutions Rich Lewis - President, Mobile Solutions 42
Slide 43: Key Messages
Key Messages Market leader in technology-led filtration systems across 2023 INVESTOR 1 Mobile Solutions end markets DAY 2 Strong position in aftermarket products provides a resilient demand profile Top-line growth enabled by competitive advantages and 3 solid execution across a broad portfolio of op
Slide 44: Mobile Solutions at a Glance
Mobile Solutions at a Glance Key Statistics1 2023 7,000 44 ~450 / 5,500+ ~30% ~64% ~60% INVESTOR Plants and OE / AFM of Sales from of Company of Company DAY Employees Customers Served Proprietary Products Revenue Pre-Tax Profit2 Distribution Centers Revenue Adjusted Pre-Tax Profit Margin2 Segment Ov
Slide 45: Product and Market Overview
Product and Market Overview PRODUCTS SOLD Air Fuel Lube Hydraulic Emissions 2023 ~60% of sales ~10% of sales ~10% of sales ~15% of sales ~5% of sales INVESTOR DAY MARKET LEADERSHIP POSITIONS $2B High-volume construction Hydraulic leader in equipment in China North America and Europe First-Fit $14B ~
Slide 46: Executing Defined Strategy Through Distinct Competitive Advantages
Executing Defined Strategy Through Distinct Competitive Advantages BUSINESS MODEL C O M P E T I T I V E A D V A N TA G E S 2023 • “Razor To Sell Razor Blades” model - Win First Fit INVESTOR Technology and innovation leader offering differentiated Platforms; Sell Replacement Filters DAY proprietary s
Slide 47: Case Study | North America On-Road Truck Success Story
Case Study | North America On-Road Truck Success Story Business Model Execution 2023 INVESTOR Customer required complex, specialized filtration for truck DAY Problem platform Donaldson provided custom filtration solution packaged in a Solution unique form with patented protection that fit in a small
Slide 48: Evidence of Solving Customer Sustainability Problems
Evidence of Solving Customer Sustainability Problems 2023 INVESTOR DAY Off-Road Hydraulic Tank China Off-Road Air Filtration European Off-Road Emissions Case Study Case Study Case Study Opportunity Opportunity Opportunity • Major global Off-Road OEM approached • Global customer looked to improve • C
Slide 49: Several Market Trends Support Continued Growth
Several Market Trends Support Continued Growth Automation / Partnering with customers in several markets to provide solutions 2023 Digitalization that support the growing labor market challenge INVESTOR DAY A More Efficient Supporting customers who look to technology to maximize and Modern World Pro
Slide 50: Key Considerations Around Alternative Power Adoption
Key Considerations Around Alternative Power Adoption The Pace of Adoption Will Be Key Conclusions Driven By Several Factors: 2023 INVESTOR DAY • These factors will influence the speed of change and Infrastructure vary across markets and products • Multiple technologies across key end markets will pl
Slide 51: Well Positioned to Address All Engine Adoption Scenarios
Well Positioned to Address All Engine Adoption Scenarios Next Generation Diesel / Other1 Hydrogen Fuel Cell Battery Electric 2023 INVESTOR DAY APPLICABLE SOLUTIONS: Cabin air filtration ✓ ✓ ✓ Hydraulic filtration ✓ ✓ ✓ Hydraulic reservoir breather ✓ ✓ ✓ Hydraulic in-tank filtration ✓ ✓ ✓ Air filtrat
Slide 52: Improving Mobile Solutions Position for Profitable Growth
Improving Mobile Solutions Position for Profitable Growth GROWTH ENABLERS 2023 Technology Regional Market Strengthening INVESTOR and Innovation Opportunities Growth Aftermarket DAY • Best-in-class engineering • China and India • GDP plus • Product innovation • Deep application expertise • Local engi
Slide 53: Identified Opportunities to Strengthen Aftermarket Leadership
Identified Opportunities to Strengthen Aftermarket Leadership 2023 INVESTOR Product Innovation Customer Experience Operational Excellence DAY • Acceleration of new technologies • Digital transformation expands reach • Global Employee Health and Safety (EHS) and products through and engagement • Lead
Slide 54: Fiscal Year 2026 KPIs to Measure Success
Fiscal Year 2026 KPIs to Measure Success Business Assumptions 2023 $2.3B - $2.6B • Solid growth over the cycle driven by strength in both First-Fit and Aftermarket sales INVESTOR DAY Sales +2% - 6% • Supported by proven business model with distinct competitive 3-year CAGR1 advantages and broader mac
Slide 55: Key Takeaways
Key Takeaways Market leader in technology-led filtration systems across 2023 INVESTOR 1 Mobile Solutions end markets DAY 2 Strong position in aftermarket products provides a resilient demand profile Top-line growth enabled by competitive advantages and 3 solid execution across a broad portfolio of o
Slide 56: Strengthening Value Proposition to Further Penetrate Industrial End Markets
2023 INVESTOR DAY Strengthening Value Proposition to Further Penetrate Industrial End Markets Guillermo Briseño - President, Industrial Solutions 56
Slide 57: Key Messages
Key Messages 2023 INVESTOR Leaders in industrial filtration with distinct competitive advantages to 1 DAY leverage across a large addressable market with plenty of runway for growth and share gains Enabling deeper customer relationships and aftermarket share gains 2 through a broad connected service
Slide 58: Industrial Solutions at a Glance
Industrial Solutions at a Glance Key Statistics1 2023 +2,700 26 +25K ~25% ~27% ~27% INVESTOR Customers of Sales from of Company of Company DAY Employees Facilities Served Proprietary Products Revenue Pre-Tax Profit2 Revenue Adjusted Pre-Tax Profit Margin2 Segment Overview $901 14.8% • Leading system
Slide 59: Large Addressable Markets With Significant White Space Opportunities
Large Addressable Markets With Significant White Space Opportunities Market SAM1 Description Product Categories 2023 • Solves customers’ toughest contamination Mist, Dust, Fumes, Cartridges, INVESTOR Industrial Air DAY Filtration $4.8B and regulatory challenges with premium Pleated Bags, Replacement
Slide 60: Industrial Filtration Leader with Sustainable Competitive Advantages
Industrial Filtration Leader with Sustainable Competitive Advantages MARKET LEADERSHIP POSITIONS 2023 Dust, Fume and Mist Collection High Efficiency Media Development Product Breath for Different INVESTOR Solutions for Diverse Markets for Industrial Applications Applications and Industries DAY Globa
Slide 61: Well Positioned to Address Key Opportunities and Secular Trends
Well Positioned to Address Key Opportunities and Secular Trends Market Drivers and Megatrends Products and Solutions • Dust and fume control solutions for environmental filtration challenges 2023 • Industrial Solutions equipment designed for optimized energy consumption and carbon footprint reductio
Slide 62: Strategic and Differentiated Business Model Enhancing Customer Relationships
Strategic and Differentiated Business Model Enhancing Customer Relationships and Strengthening Leadership 2023 create connect replace service INVESTOR Create Service DAY • Solving complex • Improves and restores contamination challenges equipment performance to for dust, fume, mist, designed thresho
Slide 63: Clear Growth Strategy Redesigned to Strengthen Leadership and Execution
Clear Growth Strategy Redesigned to Strengthen Leadership and Execution Leveraging Across a Redesigned Market Growth Drivers and More Efficient Donaldson: Market CAGR1 (FY23-FY26) and Initiatives 2023 INVESTOR • New Aftermarket and Services Organization o Focused team on a highly profitable revenue
Slide 64: Improving the Customer Experience to Drive Additional Growth
Improving the Customer Experience to Drive Additional Growth Expanded Solutions Customer Digital Experience Operational Excellence 2023 INVESTOR DAY Sustainability Benefit to Customer eCommerce Enhancements Improving Fill Rates and Delivery Times More efficient energy consumption due “One-stop shop”
Slide 65: Expanding Technologies and Solutions
Expanding Technologies and Solutions C U R R E N T S T AT E 2023 INVESTOR Connect solution via DAY …to provide customer subscription service and real time data F I R S T- F I T S O L U T I O N standard gateway…. F U T U R E S T AT E SERVICE FULL SERVICE DIAGNOSTIC Real-Time Data One-Stop Shop Servic
Slide 66: Connected Services Overview and Value Proposition
Connected Services Overview and Value Proposition Substantially reduce Assist in management of Support efficient Key Support maximum uptime the need for critical facility EHS maintenance Benefits and reliability manual readings compliance data and operations 2023 INVESTOR DAY Energy Consumption Ener
Slide 67: Expanding Technologies and Solutions to Form Strategic Partnerships
Expanding Technologies and Solutions to Form Strategic Partnerships Relationship 2023 STRATEGIC PARTNER INVESTOR DAY Support customer’s business transformation to grow and improve Proactive TRUSTED ADVISOR Customer experience at center of strategy to Improve relationship Service Predictive SOLUTIONS
Slide 68: Further Evidence of Connected Services Value
Further Evidence of Connected Services Value 2023 INVESTOR DAY Short Filter Life No Compressed Air Case Study Case Study Opportunity Opportunity • Filter life was not optimal (<6 weeks) • Differential pressure tripled • Energy levels were higher than designed • Airflow decreased 47% • Increased risk
Slide 69: Improving Industrial Solutions Position for Profitable Growth
Improving Industrial Solutions Position for Profitable Growth Leveraging Leadership Position D R IV I NG AF TE R M AR K E T 2023 • Enhancing business model to include service and connected INVESTOR DAY solutions offering provides leading edge within the filtration markets. Donaldson offers best-in-c
Slide 70: Fiscal Year 2026 KPIs to Measure Success
Fiscal Year 2026 KPIs to Measure Success Business Assumptions 2023 $1.1B - $1.2B • Sales strength in high-margin Industrial Filtration Solutions and Aerospace and Defense INVESTOR DAY Sales +4% - 8% • Increase Connected Customer penetration from <1% to 5 - 10% by FY26 3-year CAGR1 • Improved revenue
Slide 71: Key Takeaways
Key Takeaways 2023 INVESTOR Leaders in industrial filtration with distinct competitive advantages to 1 DAY leverage across a large addressable market with plenty of runway for growth and share gains Enabling deeper customer relationships and aftermarket share gains 2 through a broad connected servic
Slide 72: Life Sciences Primed for Profitable Growth
2023 INVESTOR DAY Life Sciences Primed for Profitable Growth Andrew Dahlgren - President, Life Sciences 72
Slide 73: Key Messages
Key Messages 2023 Large addressable market with significant opportunity to gain share INVESTOR DAY 1 by leveraging competitive strengths and global reach Favorable end market dynamics with exposure to sustainability trends 2 and continued M&A focus creates meaningful long-term growth prospects Signi
Slide 74: Life Sciences at a Glance
Life Sciences at a Glance Key Statistics1 2023 1,550 15 6 6,900+ ~8% ~13% INVESTOR Production and Industries Customers of Company of Company Employees DAY Distribution Facilities Served Served Revenue Pre-Tax Profit2 Historical Revenue Adjusted Pre-Tax Profit Margin2 Segment Overview $279 24.4% 25.6
Slide 75: Large Addressable Market Primed For Significant Growth
Large Addressable Market Primed For Significant Growth Market Product / Application Market SAM1 Demand Drivers Growth Examples 2023 • Investment in vaccines, cell and gene therapies • Bioreactors and fermenters INVESTOR • Customer preferences for sustainable • Chromatography separation and purificat
Slide 76: Distinct Sustainable Competitive Advantages Provide Runway for Growth
Distinct Sustainable Competitive Advantages Provide Runway for Growth Leveraging inherited strengths to go beyond filtration and into new applications 2023 such as separation for bio-processing, medical devices, food and beverage INVESTOR DAY Differentiation Deep Application Unique Integration and B
Slide 77: Leveraging Capabilities and Filtration Knowledge Across End Markets
Leveraging Capabilities and Filtration Knowledge Across End Markets 2023 Membrane Chemical Integration Precision Systems Purification INVESTOR Technology Filtration Manufacturing DAY Bioprocessing Core Life Sciences Food and Beverage Medical Device Digitization and Electrification Alternative Power
Slide 78: Leveraging Capabilities and Filtration Knowledge Across End Markets
Leveraging Capabilities and Filtration Knowledge Across End Markets 2023 Membrane Chemical Integration Precision Systems Purification INVESTOR Technology Filtration Manufacturing DAY Bioprocessing Core Life Sciences Food and Beverage Medical Device Digitization and Electrification Alternative Power
Slide 79: Redesigned to Execute on a Clearly Defined Growth Strategy
Redesigned to Execute on a Clearly Defined Growth Strategy Redesigned for Performance Clear Growth Strategy 2023 INVESTOR DAY End-Market Focus, Resulting in sales growing to Leveraged Functional Expertise ~$450M by FY26 End-market focused Centralized functional Sources of Organic Growth commercial t
Slide 80: Leveraging a Digitalization and Electrification Foundation
Leveraging a Digitalization and Electrification Foundation 2023 Alternative Power Microelectronics Disk Drive INVESTOR DAY KEY OPPORTUNITIES • Electric vehicle growth – • Increasing demand for smaller, • Long term cloud data center growth hybrid, battery and fuel cell more powerful chips • Next gene
Slide 81: Sustainable Food Improving Human Health
Sustainable Food Improving Human Health 2023 INVESTOR DAY 81
Slide 82: Life Science Trends Create a Tailwind for Innovation
Life Science Trends Create a Tailwind for Innovation 2023 Food and Beverage Alternative Protein INVESTOR DAY 100M 10B Filters consumed for bottled Bioreactor liters required for water, growing 5% annually alternative proteins by 2030 Biopharma Medical Device 100K 430M People living with disabling mR
Slide 83: Pursuing Full Spectrum of Life Sciences Opportunities
Pursuing Full Spectrum of Life Sciences Opportunities 2023 Food and Beverage Alternative Protein Bioprocessing Medical Device INVESTOR DAY KEY OPPORTUNITIES • Sterile air, liquid, and steam • Plant-based protein • Vaccines • Class I: Ostomy bags • Bottled water, dairy, and • Cultivated protein • Cel
Slide 84: Providing Process Integrity in Food and Beverage
Providing Process Integrity in Food and Beverage Food and Beverage Strategic Account Spotlight 2023 Growth Strategy INVESTOR • Leverage selling model – global agreements, sector specialists, DAY outbound calling, local support Plant by Plant Sales Strategy • Scale up bottled water, dairy, alcoholic
Slide 85: Enabling Scaleup of >$250B Alternative Protein Market
Enabling Scaleup of >$250B Alternative Protein Market Alternative Protein Market Total Global Alternative Protein Market ($B) 2023 INVESTOR CAGR DAY $1,000 % Multi-billion market growing at 20% CAGR • Improving sustainability of food supply • Reducing food contaminants (e.g. microplastics) >20% $750
Slide 86: Supporting Development of New Therapeutics with Differentiated and Disruptive Technologies
Supporting Development of New Therapeutics with Differentiated and Disruptive Technologies Global mRNA, Cell and Gene Therapy Asset • Plasmid DNA (pDNA) is the building block for new mRNA, Pipeline Forecast (Thousands of Assets) 2023 pDNA cell and gene therapies INVESTOR DAY • These new therapies ar
Slide 87: Donaldson Technology Better Suited for Large Biologics
Donaldson Technology Better Suited for Large Biologics Conventional (1-2 nm) Vaccine, Cell and Gene Therapy molecule sizes (10-90 nm) 2023 INVESTOR DAY Small Molecules mAb pDNA mRNA AAV Lentivirus The Challenge The Solution • New therapeutics are larger in size and more delicate and can break under
Slide 88: Acquisitions Provide Differentiated Solutions to Critical Parts of the Cell and Gene Therapy Value Chain
Acquisitions Provide Differentiated Solutions to Critical Parts of the Cell and Gene Therapy Value Chain Solving a Life Changing Bottleneck Through Strategic M&A 2023 INVESTOR DAY Cell Culture pDNA mRNA Viral Vectors 0.2 to 20,000 Liters Capture Harvest Final Chromatography Harvest Full size range o
Slide 89: Fiscal Year 2026 KPIs to Measure Success
Fiscal Year 2026 KPIs to Measure Success Business Assumptions 2023 $430M - $470M • 25% CAGR in core Life Sciences, driven by bioprocessing market penetration, food and beverage scaleup, and class III medical device entry INVESTOR DAY Sales +18% - 22% • 10% CAGR in digitization and electrification, d
Slide 90: Key Takeaways
Key Takeaways 2023 Large addressable market with significant opportunity to gain share INVESTOR DAY 1 by leveraging competitive strengths and global reach Favorable end market dynamics with exposure to sustainability trends 2 and continued M&A focus creates meaningful long-term growth prospects Sign
Slide 91: Q&A
DONALDSON COMPANY Q&A APRIL 2023 BLOOMINGTON, MINNESOTA
Slide 92: Long-Term Financial Overview
2023 INVESTOR DAY Long-Term Financial Overview Scott Robinson - Chief Financial Officer 92
Slide 93: Key Messages
Key Messages Investing in leading technologies to accelerate growth across 2023 INVESTOR 1 several opportunities including sustainability trends DAY Strengthening position across industries with favorable megatrends 2 that provide long-term growth tailwinds Increasing level of investment directed to
Slide 94: Historical Financials Highlight Consistent EPS Growth
Historical Financials Highlight Consistent EPS Growth ~$3,370 - $3,500 $3,307 $3,300 FY21 target achievement delayed due to COVID-19 business impacts 2023 $3,000 $2,854 Target achieved in FY22 INVESTOR Sales ($M) $2,582 • FY20-FY22 CAGR of ~13% driven by strategic initiatives DAY (e.g., innovative
Slide 95: Strong History of Consistently Rewarding Shareholders
Strong History of Consistently Rewarding Shareholders Annual Dividend ($) $0.89 2023 Consecutive Annual Dividend Increases INVESTOR for 25+ years DAY Added to $0.07 S&P High-Yield Aristocrat Fund in Jan. 2016 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 Shares Outstanding 153M 28M Sha
Slide 96: Strong Balance Sheet, Liquidity Position, and Free Cash Generation
Strong Balance Sheet, Liquidity Position, and Free Cash Generation Strongly Supports Pursuance of Strategy 1.0x 0.9x 0.8x 0.6x 2023 Net Debt to INVESTOR EBITDA • Ample capacity to invest in DAY technology and innovation and remain agile in ability to pursue FY20 FY21 FY22 strategic acquisitions $862
Slide 97: A Balanced Capital Allocation Framework
A Balanced Capital Allocation Framework Use of Cash Over Last 3-Years Future Priorities 2023 Organic Investment Organic Investment INVESTOR 2/3 Growth | 1/3 Maintenance • Strategic footprint expansion focused on underserved DAY markets and strengthening global presence • Investments in Life Sciences
Slide 98: Capturing Higher-Margin Opportunities
Capturing Higher-Margin Opportunities Donaldson’s investment mindset has changed with …and plans to leverage across a greater focus on higher-margin growth opportunities… redesigned and more efficient Donaldson: 2023 INVESTOR DAY • Ability to better serve customers by more closely aligning business
Slide 99: Strong Balance Sheet and Free Cash Flow Generation Supports M&A and Organic Growth Strategy
Strong Balance Sheet and Free Cash Flow Generation Supports M&A and Organic Growth Strategy ~1.0x ~85% +$800M 2023 Long-Term Net Debt to Annual FCF Conversion In Available INVESTOR DAY Adjusted EBITDA Target Long-Term Average Liquidity AN Sound Criteria Strategic Focus Integration Strategies ACQUIRE
Slide 100: Planting Seeds of Growth by Filling in the Bioproduction Puzzle
Planting Seeds of Growth by Filling in the Bioproduction Puzzle Lab Upstream Production Downstream Production Lab Cell Culture Production Harvest Process Fill and 2023 Filtration Applications Expansion Bioreactor Filtration Chromatography Finish INVESTOR DAY Consumables Inlet, Gas Venting, Gas TFF a
Slide 101: Enabling Continuous Margin Improvement
Enabling Continuous Margin Improvement 8% 12% Mobile 2023 Solutions INVESTOR 27% Industrial FY22 28% FY26 Solutions DAY PORTFOLIO 65% 60% Life SHIFT Sciences Continuous Improvement Organizational Redesign Enhances Expected • Inventory management and service levels Through O P E R AT I O N A L • Acco
Slide 102: Long-Term Financial Goals | FY26
Long-Term Financial Goals | FY26 Sales Segment 3-year Sales CAGR 2023 • Stable sales growth driven by momentum Mobile Industrial Life INVESTOR DAY $3.8B - $4.3B Solutions Solutions Sciences in newly entered Life Sciences markets, exposure to sustainability and +4% - 8% +2% - 6% +4% - 8% +18% to 22%
Slide 103: Key Takeaways
Key Takeaways Investing in leading technologies to accelerate growth across 2023 INVESTOR 1 several opportunities including sustainability trends DAY Strengthening position across industries with favorable megatrends 2 that provide long-term growth tailwinds Increasing level of investment directed t
Slide 104: Closing Remarks
2023 INVESTOR DAY Closing Remarks Tod Carpenter - Chairman, President, and Chief Executive Officer 104
Slide 105: Redesigned for Future Growth
Redesigned for Future Growth MOBILE SOLUTIONS • Drive additional growth by winning first fit platforms and introducing innovative products 2023 INVESTOR • Establish leadership across alternative DAY power solutions • Strengthen aftermarket leadership through several initiatives and opportunities • D
Slide 106: Q&A
DONALDSON COMPANY Q&A APRIL 2023 BLOOMINGTON, MINNESOTA
Slide 107: Appendix
2023 INVESTOR DAY Appendix 107
Slide 108: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Year Ended July 31, 2019 2020 2021 2022 Diluted EPS $ 2.05 $ 2.00 $ 2.24 $ 2.66 Tax expense per share for Federal Tax Cuts and Jobs Act 0.14 - - - Charges per share related to the conflict in Eastern Europe - - - 0.02 2023 Restructuring charges per share
Slide 109: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Year Ended July 31, 2023 (In millions) 2020 2021 2022 INVESTOR Current debt $ 3.7 $ 48.5 $ 9.5 DAY Long-term debt 644.3 461.0 617.4 Total debt 648.0 509.5 626.9 Less: Cash and cash equivalents (193.3) (222.8) (236.6) Net debt $ 454.7 $ 286.7 $ 390.3 Twel
Slide 110: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Twelve Months Ended July 31, (In millions, except percentages) 2020 2021 2022 Mobile Solutions Net sales $ 1,564.5 $ 1,818.4 $ 2,126.5 2023 INVESTOR Earnings before income taxes $ 203.1 $ 276.1 $ 293.8 Restructuring charges - 0.4 - DAY Adjusted earnings